US car sales propped up by record-breaking fleet orders

US new car and light truck sales fell in the first half of 2019, but a sharp decline in retail sales was offset by a record surge in fleet sales.

According to leading analysts at Edmunds, total new car sales in June fell 3.3% to 1.51 million compared with June 2018. This reflects a 5.4% decrease on May 2019. The seasonally adjusted annualised rate (SAAR) for total sales is expected to be 17.2 million units, down 500,000 from a year ago.

Carmakers got a boost from higher commercial and rental agency business as fleet sales rose 5% in June. Combined rental, commercial and government purchases of new vehicles were up 5% year-on-year to 1.52 million in June, following an even stronger gain in May. The rental fleet channel was strongest in June, up 11% year-on-year.

According to LMC Automotive, Fleet sales totalled 322,000 units in June, up 3.9% from June 2018. Fleet volume accounted for 22% of total light-vehicle sales – up from 21% last year.

Commercial and rental

With more than 1.63 million vehicles sold into fleet this year, the industry is on track to set the highest volume of new fleet sales in US history. Fleet growth has been driven mostly by the commercial and rental fleet channels – both up 6% year-to-date.

According to analysts at Cox Automotive, this trend is likely to continue throughout the rest of the year.

“Fleet sales, both commercial and rental, have been the key to supporting the new-vehicle market in the first half and are expected to finish the January-to-June period up nearly 7%,” said a Cox spokesperson.

“One key contributing factor is likely tax law changes found in the 2017 tax reform package. Depreciation allowances for business-use vehicles increased significantly, and as a result, the market has seen more fleet activity and business-use vehicle purchases.”

SUVs and trucks

In the market share stakes, Ford continues to lead the pack, but sales volumes continue to decline in line with the rest of the ‘Detroit 3’. The main beneficiaries were European and Far Eastern Importers such as Volkswagen (+9.6%) and Subaru (+2.8%) and home-grown Tesla, whose year to date sales surged 73% to 85,000 units.

The market for SUVs and pick-ups remains strong – evidenced by the continuing market dominance of Ford’s F-series (+15.1%), Chevrolet’s Silverado (+5.7%) and Ram’s eye-catching 45.4% year on year sales surge.

According to LMC Automotive, light trucks and SUVs accounted for 71.1% of new retail sales in June – the highest market share ever recorded.